New Deal era erected lasting barriers to workers of color

[Jhumpa, “Exploring Guaranteed Income Through A Racial And Gender Justice Lens,” Roosevelt Institute, June 2019 https://rooseveltinstitute.org/wp-content/uploads/2020/07/RI_UBI-Racial-Gender-Justice-brief-201906.pdf, accessed June 26, 2023, GDS-LL]

The New Deal era greatly expanded pathways to economic mobility and security for white Americans, but it also erected more barriers for people of color. During the early days of New Deal negotiations, FDR made a political comprise to appease Southern Democrats and agreed to exclude agricultural and domestic workers—who were predominantly Black and Latinx—from being eligible for a range of benefits.

The exclusions baked into the New Deal reinforced the inequities we see today. In 1935, the Social Security Act was created, but the early exclusions prevented many workers of color from receiving retirement benefits, even though they paid into it. This played a significant role in preventing workers of color from using their income to generate wealth and assets. In 1937, the Federal Housing Authority (FHA) became the first federal agency to openly advocate and support segregation between races, openly refusing loans to people of color, which curtail these communities’ ability to buy homes and restricted the neighborhoods in which they could live—all barriers to home ownership, which has been one of the most significant mechanisms for building wealth in the United States. In the 1940s, the largest federal public benefits program in history came about in the form of the GI Bill, a program that paid college tuition and gave low-interest home mortgages to returning veterans, ultimately providing a low-cost route to wealth creation. However, discrimination in college admissions and housing markets prevented most soldiers of color from using the GI Bill, which thus prevented an accumulation and transfer of wealth to future generations.